After The Close
The stock market put in a choppy session today, ending on a generally lower note. At the close of trading, the Dow Jones Industrial Average was down nine points; the broader S&P 500 Index was off eight points; and the NASDAQ was lower by 60 points. Market breadth was divided, with advancers and decliners about evenly matched on the NYSE. The major market sectors were mixed, as gains in consumer and healthcare issues offset losses in the energy and basic materials names.
In economic news, the final GDP number for the fourth quarter of 2017 had the economy expanding at a rate of 2.9%, annualized. This figure was better than had been expected. In addition, pending home sales rose 3.1% during the month of February, which was also a solid showing. Tomorrow will be a busy day for economic news, as well. Personal income and spending levels for the month of February are due out. The latest weekly initial jobless claims will also be released.
In the corporate sector, we heard from a couple of large companies over the past 24 hours. Specifically, shares of Lululemon Athletica (LULU) moved up in price, after the yoga apparel maker posted solid numbers and provided an upbeat outlook. Shares of RH (RH) also jumped in price after the home furnishings retailer delivered a good report.
Technically, the stock market has pulled back quite a bit over the past couple of weeks, and is now back to where it had been in mid- February. With the recent selling, the S&P 500 Index is now just above to its 200-day moving average located at the 2,590 level. Hopefully this area will provide some support. It is not clear what might serve as the catalyst to push stocks higher. However, some traders may want to see a more stable situation in Washington.
– Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
Before The Bell
The stock market continues to jump up and down, with the latest dose of volatility extreme even by recent hectic standards. On point, after stocks plummeted this past Thursday and Friday, on increasing trade war fears, losing a combined 1,150 points in the Dow Jones Industrial Average, things turned on a dime on Monday, as that blue chip composite soared by nearly 670 points. Then, after a mixed start to the latest session, equities regrouped and pushed notably higher as the morning wound down, rising better than 200 points as noon arrived on the East Coast.
In all, the market was clearly building on Monday's big win for the bulls, as investors assessed the possibility of a trade war evolving from the Administration's adoption of stiff tariffs on imported steel and aluminum. Last week, it seemed as though a serious conflict was just around the corner. As the new week unfolded, however, such fears had eased. Yesterday's solid follow through suggests that those fears were continuing to subside. Of course, the situation is fluid, and the waxing and waning of such uncertainty is only likely to continue in the near future leading to further notable swings in market momentum and psychology.
In addition to trade worries, Wall Street is concerned with Facebook (FB), which has seen its target price projections reduced due to fallout from data issues, which surfaced last week. In other news, the Conference Board released figures on consumer confidence, with that metric backtracking a bit in March, but continuing to hold at an elevated level. In addition to the confidence reading recent days have seen solid results from both the leading indicators and orders for durable goods. Still, as the quarter ends, our sense is that GDP growth will struggle to get to 2% this period, which is something of a step down from recent quarters.
Meanwhile, the buying continued as the afternoon got under way. But there was a distinctly mixed quality to the day's action as the session continued, with the Dow holding nicely higher, while the NASDAQ, the S&P Mid-Cap 400, and the small-cap Russell 2000 all started to retreat. Soon the large-cap weighted S&P 500 would join the bears, leaving only the Dow in the black. As to the blue-chip composite, its gain continued to shrink, until as we moved inside the final two hours of trading it, too, edged into the red. The main casualty, though, was the NASDAQ, dragged down by another hefty loss in Facebook shares.
The market then continued to hold largely in the red, save for the Dow, which went back and forth. For the NASDAQ, though, there was no indecision, as its losses swelled, soon eclipsing one percent. Then, as we hit the final hour of trading, the bears regrouped and sent the equity market skidding to major session losses. What precipitated the selling was a broad-based unloading of tech shares, in part on renewed concerns about trade and China. The late-day tech reversal also came after a report chipmaker Nvidia (NVDA) would temporarily suspend self-driving tests. That report sent the stock down nearly 8%.
Also hurting stock market sentiment was a late-day plunge in bond yields, with the 10-year Treasury note, which briefly had topped the 2.90% mark late last week, tumbling to below 2.79%. In all, the Dow, once up more than 200 points on the day, skidded to a late-session loss of nearly 500 points, before some last-minute buying evolved, while the NASDAQ, which had gained 228 points on Monday, lost more than that at one point, before buyers tiptoed back in, as well. At the close, the Dow was still off 345 points; the S&P 500 was down 46 points; and the NASDAQ was lower by 212 points.
Looking out on a new day, and following yesterday's late plunge, we find that stocks were lower in Asia overnight, on a technology selloff, while in Europe, the leading bourses are now tracking downward, as well. Elsewhere, oil, a late casualty yesterday, is now, off again, while Treasury yields, down to 2.79% in dealings in the latest session, are now passing hands at 2.76% in a flight to safety. Finally, U.S. equity futures are now suggesting a modestly weaker opening when trading resumes later this morning on further slippage in technology shares.
— Harvey S. Katz, CFA
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
